There are currency exchange centers and in every city across the world, regardless of what currency you are exchanging. It can be frustrating sometimes to think you will get a certain rate, only to learn that the rate is different. You can watch the rates ahead of time at sites such as xe.com, or visit the centers yourself. The entire process is fascinating, and curious as well. Why do currency rates fluctuate so much?
Currency is like any other market. It has a supply and demand rate attached to it. There are a number of factors that influence currency exchange rates. Learn more about them here.
Inflation
Inflation is the greatest factor impacting currency exchange centers, and others across the world. It signals the purchasing power of a country. When inflation is low, the currency value for that country is high. When inflation is high, the dollar value is weaker.
The purchasing power has weakened somewhat. Some economists will say that high inflation is good for a nation. It is a matter of perspective. It can be. In the context of currency exchange, a high inflation rate is going to weaken the nation’s currency.
Interest Rates
Interest rates are a matter of everyday news because they impact and are impacted by the global economy and world news. The central bank of a country will determine the interest rate. Interest rates are determined by inflation. This is going to impact the rate of currency in every country.
Political Uncertainty
The people don’t like uncertainty, the central banks don’t like uncertainty. When there is uncertainty in politics, interest rates and exchange rates will take a hit. The bigger the uncertainty, the bigger the hit.
National Debtload
Currency is money, and a debt load of a country is an important part of this process. The traditional way of developing a budget at the national level is through the financing of the deficit. Borrowing happens to float the budget, and keep the people happy. That stimulates economic growth at the government’s level, and also with the people.
Invest in National Currencies
If you are interested in centers like currency exchange Calgary, or elsewhere, spend time doing your research before you purchase foreign currencies. Many investors buy currency in order to make money off of the exchange rates. Consider all of the factors in play every day, such as interest rates, politics, and inflation, when you are looking at currency exchanges. It’s never a bad idea to buy money, you just have to find the right time.
